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So you have a thriving business with throngs of customers and even other entrepreneurs interested in getting in on the action. You thought about opening more locations but the legal and financial responsibility of trying to replicate your success is not too appealing. Finally, someone mentions turning your business into a franchise and suddenly your interest is piqued. But what does it take to turn your bustling business into a highly sought after franchise? Carmen Lemons, owner of Lem’s Bar-B-Q in Chicago completed the grueling two and a half year process in June. She turned a decades-old family run business into a franchise and is now marketing it to potential franchisees. Lemons offers these tips for what it takes to turn your business into a franchise.
Hire the right expertise: While Lemons says the process of getting the correct state certification to turn her restaurant into a franchise should have only taken one and a half years, not having the right team held up the process. “We had to hire a new accountant because he didn’t know about franchises,” says Lemons. Hiring a lawyer and an accountant who are familiar with franchising will make the process smoother. Lemons was able to tap into iFranchise’s resources to find an accountant and an attorney to guide her through the financial and legal process.
Understand the financial costs: With all the legal, financial and other help, state fees and aid from iFranchise, an organization that helps entrepreneurs turn their businesses into franchises, Lemons says she took out a $100,000 loan to pay for the costs. “We took out the loan in 2007 and will be finished paying it off in March,” she says. Adding an additional $500 to each minimum payment accelerated loan repayment for the franchisor. But understanding the company’s cash flow and how it could foot the bill for the loan was also important. If your business is not profitable you may want to reconsider turning it into a franchise.
Determine your marketing strategy: Having a thriving business and a thriving franchise are two different beasts that must be tamed simultaneously. When looking for potential franchisees to buy into your company, you must meet them where they are. Lemons says the company will begin airing radio ads on a local station as well as making rounds at tradeshows. Lemons was also able to tap into iFranchise which is helping her flesh out a marketing plan.
Resources for franchises